What type of bank account is not insured quizlet? EXPLAINED
Many people assume all their deposits at banks are covered; however, this coverage has limits set by the federal government and collected through fees collected from banks as insurance premiums to guarantee customers accounts should their bank fail. Its services are guaranteed by full faith and credit of U.S. government, overseen by five member board with three nominees nominated by president and confirmed by Senate.
The FDIC insures savings accounts, money market deposits, and checking account balances up to $250,000 for each depositor, ownership category, and insured bank. Investment products like mutual funds do not fall under FDIC coverage.
Your accounts’ insurance will depend on their title and ownership category, for example an individual’s personal deposit accounts at one insured bank (such as interest-bearing checking and money market accounts as well as an IRA) are aggregated together for up to $250,000 of coverage; single accounts such as negotiable order of withdrawal accounts can also be separately insured up to that limit.
Individual family trust, informal revocable trust (also referred to as payable on death trust or Totten trust) and living trust accounts have separate insured amounts, due to their different classifications as accounts not considered one single account due to having beneficiaries named in case of their death and an account document must clearly specify all owners with relationship(s). Such accounts do not fall under FDIC standard deposit coverage limits but instead require special disclosure rules in order to qualify for higher levels.
If a bank does fail, the FDIC works quickly to find another financial institution willing to acquire the failed one, moving FDIC insured deposits along with them to its new owners while compensating depositors up to their insured limit for losses experienced as a result of failure.
BankFi is an excellent tool developed by the FDIC that makes it easier for you to stay informed about how much of your deposits are insured at each of the 3,500 financial institutions it covers. It’s especially helpful if you have multiple bank accounts that can be difficult to track.
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